J.P.Morgan Don’t Expect Much Post-Election Reaction In Spanish Assets

Ahead of the Spanish national election (held this coming Sunday) J.P.Morgan note that “recent polls show a narrowing gap between PP and PSOE. Our baseline view remains that some form of PP led government together with Vox support is the most likely outcome. However, this outcome now appears only slightly more likely than the alternative, i.e. a repetition of the incumbent PSOE-Podemos coalition, further underpinned by agreements with regional parties. Despite the rising uncertainty about the election outcome, the mainstream anchor supplied by the two cornerstone parties - PP and PSOE - suggests that that Spain remains largely insulated from bouts of political/policy risk linked to populism or Euro-scepticism. Overall, we expect a modest market reaction from the elections, given the lack of strong anti-EU tendencies in Spain.”